Highway builders seek relief on losses, tax disputes in Budget 2025-26

Highway developers and infrastructure companies have urged the government to address long-pending tax ambiguities and compliance bottlenecks in the upcoming Union Budget 2025–26, seeking measures that could ease cash flows, reduce litigation and support the government’s infrastructure monetisation push, sources told Business Today.

Among the key demands is a clear tax clarification on depreciation treatment of road assets, which continue to be a major source of disputes between developers and tax authorities. Industry executives argue that roads, operated under concession agreements, should be unequivocally treated as intangible assets eligible for depreciation, a move that could significantly impact project profitability and balance sheets.

Another critical ask relates to carry-forward of losses in infrastructure special purpose vehicles (SPVs) following mergers, stake sales or restructuring. Sources said the current tax framework restricts loss carry-forward in cases of ownership change, even when restructuring is driven by refinancing or asset monetisation. Developers are seeking relaxation to allow losses linked to long-gestation highway projects to be carried forward without disruption.

Highway builders have also sought policy support for Infrastructure Investment Trusts (InvITs), requesting changes that would allow a wider set of institutional investors to deploy funds into InvIT structures. According to industry participants, easing such restrictions would align with the government’s broader asset recycling and National Infrastructure Pipeline strategy, while unlocking long-term capital for the sector.

In addition, companies are pushing for a legislative fix to prevent disallowance of expenses under Section 14A when no exempt income is earned, an issue that continues to fuel litigation despite favourable court rulings. Sources noted that a clear amendment could shut down thousands of ongoing disputes and improve ease of doing business.

Industry players have also flagged the overlap between TDS and TCS provisions on purchase of goods, particularly Sections 194Q and 206C(1H), which they say has led to double compliance, working capital blockage and operational confusion across large projects.